hud powersaver pilot loan program - department of energy.pdfVIP

December 10, 2010 HUD PowerSaver Pilot Loan Program The U.S. Department of Housing and Urban Development (HUD) recently announced the creation of a pilot loan program for home energy improvements. The PowerSaver loan program is a new, energy- focused variant of the Title I Property Improvement Loan Insurance Program (Title I Program) and is planned for introduction in early 2011. The PowerSaver pilot will provide lender insurance for secured and unsecured loans up to $25,000 to single family homeowners. These loans will specifically target residential energy efficiency and renewable energy improvements. HUD estimates the two-year pilot1 will fund approximately 24,000 loans worth up to $300 million; the program is not capped. The Federal Housing Administration (FHA), HUD‟s mortgage insurance unit, will provide up to $25 2 million in grants as incentives to participating lenders. FHA is seeking lenders in communities with existing programs for promoting residential energy upgrades.2 Title I Program Background The federal government has used home loan insurance as a prescription for economic troubles and tight credit since the Great Depression and passage of the 1934 National Housing Act that created the Title I program and the much larger Title II program.3 Title I is aimed primarily at financing improvements to the basic livability or utility of existing homes. PowerSaver is the latest iteration on Title I and is aimed specifically at home energy improvements. Through the Title I Program, FHA insures secured and unsecured loans made by private lenders, offering consumers the opportunity to obtain more affordable home improvement loans. Lending institutions make loans from their own funds to eligible borrowers to finance these improvements. These loans may be unsecured if they are $7,500 or less and must be secured with a first or second property lien above $7,500. FHA i